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American to end Etihad & Qatar codeshares over subsidy row

July 12, 2017 - Air Transport World

American Airlines is ending its codeshare relationships with Etihad Airways and Qatar Airways as a protest against what it alleges to be government subsidies of the major Gulf carriers.

American confirmed Wednesday it had notified Etihad and Qatar of the codeshare terminations on June 29. The last valid date of travel using the codeshare will be March 24, 2018.

All other aspects of our commercial relationship with Qatar and Etihad remain intact, an American spokesman said, including interline access, cargo agreements, frequent flyer program and lounge access. Qatar Airways, like American, is a oneworld global alliance member so interlining, frequent flyer and lounge benefits remain pertinent.

“In light of our ongoing dispute over the Open Skies agreements, American Airlines notified Etihad Airways and Qatar Airways on June 29 of our decision to terminate our codeshare relationships. Given the extremely strong public stance that American has taken on the ME3 [Middle East three] issue, we have reached the conclusion that the codesharing relationships between American and these carriers no longer make sense for us,” American said in a statement sent to ATW.

“This decision has no material financial impact on American and is an extension of our stance against the illegal subsidies that these carriers receive from their governments. We are committed to doing everything we can to continue to support our team members and ensure that there is fair competition between American and the Gulf carriers.”

Etihad and Emirates operate to the US under the US-UAE Open Skies agreement, while Qatar Airways operates under the US-Qatar agreement.

A long-running campaign spearheaded by American, Delta Air Lines and United Airlines—supported by many of their union groups—alleges Gulf carriers violate the terms of those Open Skies treaties because they benefit from large government subsidies that enable them to cut prices and expand their networks. The Gulf carriers strongly deny those claims.

This year has seen an escalation of campaign efforts by the US majors, which appear to believe that the new Trump administration might be more sympathetic.

American Airlines CEO Doug Parker reacted strongly in June when Qatar Airways revealed it was seeking to invest up to a 10% stake in American. Parker issued a statement to employees saying the unsolicited bid was “puzzling given our extremely public stance on the illegal subsidies that Qatar, Emirates and Etihad have all received” and that it strengthened American’s resolve on the Gulf carrier issue. The SEC filing revealing Qatar’s bid was made June 22, just days before American issued its codeshare termination notices to Etihad and Qatar.

The US majors’ campaign is not supported across all US airlines. Independents like New York-based JetBlue Airways get feed from the Gulf carriers, while cargo operators like FedEx benefit from fifth and seventh freedoms that are part of Open Skies terms and which allow cargo operators to hub from places like Dubai.